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Is Direct-To-Consumer becoming an Important Retail Channel ?
The world is evolving, and business models are no exception. Many Brands are adopting the Direct to consumer (D2C) model. As with D2C, brands can skip the middlemen or third parties and deliver the product directly to the customer. The reason for selecting D2C is that this type of business model is suitable for SMEs, who want to include their own data and create a deeper level of relationship with their customers. In this era of hyper technology, customers have become very demanding. They are looking to purchase goods from the manufacturers directly irrespective of the type of product they are looking to buy. The below image explains the difference between a traditional retailer and direct to consumer.
Brands have understood that they can satisfy consumer orders on their own; thus they have taken complete control over the brand messages, and customer relationship which has a significant impact on the way businesses view their supply chain. In a case study by Astound Commerce, nearly 59% of consumers prefer to research manufacturers’ websites directly, with 55% of customers prefer to make purchases the same way.
There are many benefits in opting Direct to consumer model. But first, let us understand the challenges associated with D2C and how can a brand overcome the said challenges.
- Handling Demand: Brands that get the selling tactics right, will reap the reward of increased sales, probably at the expense of their competitors. Many Brands offer many products to their customers which is overwhelming, especially for businesses that are growing. It is often challenging to choose the products to sell or exclude via e-commerce stores. Depending on their industry, brands should understand the products of their competitors and the ones brands should be selling. The immediate solution for this would be finding a D2C fulfilment service provider that handles wholesale products and can offer several options which will help the brands in meeting their customer demand and ensure that the catalogue doesn’t run out.
- Storing Products: When brands start receiving increased number of orders from customers, it is essential to stock the inventory at all times. In these challenging times, brands have to find ways to make the most of customer orders and search for options to satisfy them. Consequently, brands will not be able to meet these orders on time, and there is a chance of missing out on crucial revenue. To overcome this situation, understanding ways to boost warehousing operations or hiring a fulfilment service that offers scalability will immensely help in meeting a sudden increase in customer orders. Fulfilment providers have resources and skills to adjust to changing needs. They can provide the required warehouse space, staff and resources that are needed to complete orders by the customers promptly.
- Handling Returns: There are many returns taking place frequently in online business. It is crucial to have a well-managed return management system which can offer a quick, and easy return and replacement of damaged products as this can increase customer loyalty and grow sales revenue by threefold. Easy return options are an essential component to improve customer experience and also prevents complaints from the customers. Ensuring the product returns process accurately, and quickly helps in retaining customers and can also help to earn appreciative reviews online. Brands should sign up an order fulfilment provider with an FDA compliant returns process that will let them quickly get the products back on the virtual shelves in their store.
- Packaging: Fantastic products should be boxed with equally impressive boxing. It is vital to offer an unboxing experience to the customers, which is memorable and attractive. Additionally, it is also essential to deliver the products to the customers in an excellent condition which has proper packaging, as packing of the product has a significant impact on the value that customers place on the product. Packing essential to make sure that the customers perceive the brand with a high-value even before the unboxing. One way to do this is by hiring a fulfilment provider that will take care of the packaging process, and can help by delivering the right packages to the customers in good condition and on-time.
The benefits of selling D2C
Besides the obvious benefits, there are other notable benefits of D2C approach, which are discussed below.
- Better Customer Experience: Prior to D2C, brands rarely associated with customers directly. But in today’s competitive world, customers expect brands to understand their needs with efficiency. When using direct to customer model, brands can better interact with customers and respond to the needs with speed and efficiency. D2C makes the customer’s buying experience as affordable and timely as possible, which in turn increases positive brand recognition and repeat customers.
- Brand Visibility: Direct to customer approach helps the brands in responding to customer needs with efficiency. In a conventional retailing relationship, there is no direct relationship with the customer. When the item hits the racks, CPG brands no longer have control. But with D2C, brands can avoid the middleman and take full control over the operation of their product, which can increase better brand recognition and visibility.
- Speed: In today’s digital era, customers don’t like to be kept waiting for their orders, and if they have an option available for the fastest delivery, then shoppers will opt for it. By using D2C approach, brands can quickly sell their products without the traditional process of distribution to wholesaler, wholesaler to retailer, as the conventional method can slow down the shipping time.
- Increased Sales: D2C allows customers to purchase the product from manufacturers directly, and when customers see different products available at the brand, this, in turn, will increase sales. It has been many years since brands wanted an option that would increase brands visibility and sales, and Direct-to-Customer is the way to go.
- Fulfilment: Today’s customers do not forgive when it comes to terrible delivery experience. Fulfilment has always been a critical aspect for brands in achieving this goal. By opting D2C, they have the exclusive control of their service. Which lets the brands focus on their fulfilment strategy and sell the products with efficiency and ease.